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Credit card pros and cons

Determine whether a credit card is right for you with our comprehensive list of credit card pros and cons.

Credit cards can be a convenient way to manage your finances – but they can also be expensive and risky. If you’re deciding whether or not a credit card is right for you, it’s best to compare some of the main benefits and disadvantages to help you make your decision. If you’re still unsure, we’ve created a list of who a credit card may be best suited for – and who should perhaps avoid one.

9 benefits of using a credit card

Some of the perks that come with paying on plastic include:

  1. A credit card is safer than carrying cash. While there’s only a small chance of having lost or stolen cash returned, a credit card can quickly be cancelled if you lose your wallet. Most financial institutions also have security processes in place to protect you if your card has been lost or stolen, or if you suspect your account has been used for a fraudulent transaction. If you’re in any of these situations, make sure to contact your bank to report the issue as soon as possible.
  2. A credit card can build your credit rating. Your credit card account details and payment history make up a key part of your credit profile. If you keep your account in good standing, this information will help you build up a good credit score, which could increase your chances of approval – and better interest rates – for other products such as car loans or a mortgage.
  3. You can get interest-free days. If you pay your balance in full before the statement period ends, you can be rewarded with interest-free days on future purchases for a set period of time. This is also known as the interest-free grace period.
  4. Earn rewards points when you spend. Rewards and travel credit cards allow you to earn points on every dollar you spend on eligible purchases, such as gas and groceries. Rewards credit cards let you earn points to redeem with the providers rewards program for perks like flights with partner airlines, merchandise from the providers store or cash back. Travel rewards credit cards, on the other hand, let you earn flights with specific airline loyalty programs.
  5. You can request a chargeback if you’re unhappy with a product or service. You can request a chargeback through your credit card company if you have a dispute with a merchant – either in-store or online.
  6. Credit cards work in any currency. Although foreign transaction fees usually apply, you can use your credit card overseas to make purchases in a foreign currency. There are even credit cards that waive fees for international purchases, which could be useful if you often shop at overseas online stores or you’re a frequent traveller.
  7. Credit cards give you an emergency line of credit. Credit cards can be a financial safety net if you don’t have enough cash or savings to cover any unexpected costs that arise. Remember that you have to repay everything you owe, though.
  8. Credit cards often have complimentary extras. Credit card features such as travel insurance, purchase protection and extended warranty insurance can save you money and give you peace of mind. Other value-adding features include complimentary flight offers, airport lounge passes and even early access to ticket sales.
  9. You can consolidate debts and save money on existing balances. Balance transfer credit cards allow you to move existing high-interest debts to a new account with a low or 0% promotional interest rate. This can save you money on interest charges and help you pay down your debt faster.

7 disadvantages of using a credit card

The downsides of spending with a credit card include:

  • Paying high interest rates. If you carry a balance from month-to-month, you’ll pay interest charges. Purchase and cash advance interest rates can be as high as 22% APR, sometimes higher, so you can end up paying hundreds or even thousands more than you initially charged in interest if you’re unable to make repayments in full each month.
  • Credit damage. Missed credit card repayments and ongoing debts are recorded on your credit file and can impact your chances of getting a loan down the track, or getting a loan with a competitive interest rate. Read our guide on how to rebuild your credit score for some tips.
  • Credit card fraud. There are a range of fraud schemes that target credit cards. While you can be compensated for illegal transactions on your account, dealing with credit card fraud can still be a time-consuming and stressful process.
  • Cash advance fees and rates. It’s very expensive to use your credit card to withdraw cash or make other “cash equivalent” transactions, such as buying foreign currency or gambling. Using a credit card for a cash withdrawal will attract a cash advance fee worth around 3% of the total transaction amount. It also typically attracts an interest rate of 19.99–21.99% right away. There is usually no interest-free period offered with a cash advance transaction.
  • Annual fees. While you can often get debit cards without annual fees, many credit cards have them. These can cost as little as $25 per year, or as much as $800 depending on the card that you choose. Generally, the more perks you want, the higher the cost of the card annually. If you want to avoid this charge, you can consider a no annual fee credit card — but make sure you look at all the other features to help find a card that works best for you.
  • Credit card surcharges. Businesses sometimes apply a service fee, also known as a convenience fee or a surcharge, when you pay with a credit card. This fee is usually around 0.5–3% of the total transaction cost and is charged for the convenience of paying with plastic. If you’re using your credit card in Canada, a merchant is legally supposed to notify you of the service fee before charging you.
  • Other fees can quickly add up. Depending on your card, you could be charged fees when you miss a payment, fees if you spend over your credit limit, fees for overseas transactions, balance transfer fees and even some rewards programs fees. If you carry a balance or don’t have access to interest-free days, there’s also a good chance interest will be applied to these charges.

Compare credit cards

If you’re ready to get a credit card, the next step is to pick one that best fits your needs. Below, you can search through different types of credit cards.

Name Product Welcome Offer Rewards Purchase Interest Rate Annual Fee Min. Credit Score Description
Finder Award
OFFER
HSBC +Rewards™ Mastercard®
30,000 Points
2x points per $1 spent
11.9%
$0 annual fee for the first year ($25 thereafter)
Min. recommended credit score: 630
Get 30,000 Points (up to $150 in value) when you spend $2,000 in the first 6 months. Plus, get the 1st year annual fee waived for the primary cardholder ($25 value). Apply by January 31, 2022.
BMO CashBack Mastercard
5% cash back
Up to 3% cash back
19.99%
$0
Min. recommended credit score: 660
Get 5% cash back on all eligible purchases in the first three months of card membership (up to max. spend of $2,000). Plus, get a rate of 1.99% on balance transfers with a 1% balance transfer fee for nine months.
Tangerine World Mastercard
15% cash back
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 600
Earn an extra 15% cash back (up to $150) on up to $1,000 of everyday purchases in the first 2 months Until January 31, 2022. Plus, get a 1.95% interest rate on balance transfers for the first 6 months (valid within the first 30 days of account opening, 1% transfer fee applies).
Neo Financial Credit Card
N/A
Average 5% cash back
19.99% - 24.99%
$0
Min. recommended credit score: 600
Earn an average 5% cashback at thousands of partners and at least 1% cashback guaranteed. Neo partners with major gas and grocery stores, restaurants, gyms, coffee shops and more.
BMO Preferred Rate Mastercard
3.99% rate on balance transfers for 9 months
N/A
12.99%
$20
Min. recommended credit score: 660
Get a rate of 3.99% on balance transfers for 9 months with a 1% transfer fee. Plus, get the $20 annual fee waived in the first year.
American Express Cobalt Card
50,000 points
Up to 5x points per $1 spent
20.99%
$155.88
Min. recommended credit score: 700
Earn up to 50,000 Membership Rewards points in your first year. Earn 2,500 Membership Rewards points for each monthly billing period in which you spend $500 in net purchases on your card (up to 30,000 points). Plus, earn a Welcome Bonus of 20,000 Membership Rewards points when you spend a total of $3,000 in purchases on your Card in your first 3 months of Cardmembership.
Brim Mastercard
Up to $200 worth of bonuses
1 point per $1 spent
19.99%
$0
Min. recommended credit score: 700
Earn up to $200 worth of bonus points when you shop with Brim retailers for the first time through the Brim mobile app.
Tangerine Money-Back Credit Card
15% cash back
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 600
Earn an extra 15% cash back (up to $150) on up to $1,000 of everyday purchases in the first 2 months Until January 31, 2022. Plus, get a 1.95% interest rate on balance transfers for the first 6 months (valid within the first 30 days of account opening, 1% transfer fee applies).
SimplyCash Card from American Express
4% cash back
Up to 1.25% cash back
19.99%
$0
Min. recommended credit score: 700
Earn 4% cash back on purchases (up to $200 cash back) for the first 6 months of Cardmembership.
American Express Green Card
10,000 points
1 point per $1 spent
20.99%
$0
Min. recommended credit score: 700
Earn a Welcome Bonus of 10,000 Membership Rewards points when you charge $1,000 in purchases to your card in the first 3 months as a new Cardmember.
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Name Product Balance Transfer Rate Balance Transfer Fee Purchase Interest Rate Annual Fee Min. Credit Score Description
Scotiabank Value Visa Card
0.99% for the first 6 months (then 12.99%)
N/A
12.99%
$29
Min. recommended credit score: 660
Get a 0.99% introductory interest rate on balance transfers with a 0% transfer fee for the first 6 months. Apply by February 28, 2022.
BMO CashBack Mastercard
1.99% for the first 9 months (then 22.99%)
1%
19.99%
$0
Min. recommended credit score: 660
Get 5% cash back on all eligible purchases in the first three months of card membership (up to max. spend of $2,000). Plus, get a rate of 1.99% on balance transfers with a 1% balance transfer fee for nine months.
Tangerine World Mastercard
1.95% for the first 6 months (then 19.95%)
3%
19.95%
$0
Min. recommended credit score: 600
Earn an extra 15% cash back (up to $150) on up to $1,000 of everyday purchases in the first 2 months Until January 31, 2022. Plus, get a 1.95% interest rate on balance transfers for the first 6 months (valid within the first 30 days of account opening, 1% transfer fee applies).
BMO Preferred Rate Mastercard
3.99% for the first 9 months (then 12.99%)
1%
12.99%
$20
Min. recommended credit score: 660
Get a rate of 3.99% on balance transfers for 9 months with a 1% transfer fee. Plus, get the $20 annual fee waived in the first year.
Tangerine Money-Back Credit Card
1.95% for the first 6 months (then 19.95%)
3%
19.95%
$0
Min. recommended credit score: 600
Earn an extra 15% cash back (up to $150) on up to $1,000 of everyday purchases in the first 2 months Until January 31, 2022. Plus, get a 1.95% interest rate on balance transfers for the first 6 months (valid within the first 30 days of account opening, 1% transfer fee applies).
BMO Rewards Mastercard
1.99% for the first 9 months (then 22.99%)
1%
19.99%
$0
Min. recommended credit score: 725
Get a bonus of 10,000 BMO Rewards points when you spend $1,000 in the first 3 months. Plus, get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
BMO AIR MILES Mastercard
1.99% for the first 9 months (then 22.99%)
1%
19.99%
$0
Min. recommended credit score: 660
Get 800 AIR MILES Bonus Miles (enough for $80 towards purchases with AIR MILES Cash). Get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
Scotia Momentum No-Fee Visa Card
1.99% for the first 6 months (then 22.99%)
N/A
19.99%
$0
Min. recommended credit score: 660
Earn 5% cash back on all purchases for the first 3 months (up to $2,000 in total purchases). Plus, get a 1.99% introductory interest rate on balance transfers for the first 6 months with no balance transfer fee. Apply by January 1, 2022.
Scotiabank Gold American Express Card
0% for the first 6 months (then 22.99%)
1%
19.99%
$0 annual fee for the first year ($120 thereafter)
Min. recommended credit score: 700
Earn up to 40,000 bonus Scene+ points in your first year (that's up to $400 towards travel) and no annual fee in the first year, including supplementary cards. Plus, get a 0.00% introductory interest rate on balance transfers for the first 6 months (A 1% balance transfer fee applies). Apply by January 1, 2022.
Scotia Momentum Visa Card
2.99% for the first 6 months (then 22.99%)
N/A
19.99%
$39
Min. recommended credit score: 660
Get a 2.99% introductory rate on balance transfers and a 0% balance transfer fee for the first 6 months. Apply by February 28, 2022.
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Compare up to 4 providers

Name Product Welcome Offer Rewards Purchase Interest Rate Annual Fee Min. Credit Score Description
Finder Award
OFFER
HSBC +Rewards™ Mastercard®
30,000 Points
2x points per $1 spent
11.9%
$0 annual fee for the first year ($25 thereafter)
Min. recommended credit score: 630
Get 30,000 Points (up to $150 in value) when you spend $2,000 in the first 6 months. Plus, get the 1st year annual fee waived for the primary cardholder ($25 value). Apply by January 31, 2022.
American Express Cobalt Card
50,000 points
Up to 5x points per $1 spent
20.99%
$155.88
Min. recommended credit score: 700
Earn up to 50,000 Membership Rewards points in your first year. Earn 2,500 Membership Rewards points for each monthly billing period in which you spend $500 in net purchases on your card (up to 30,000 points). Plus, earn a Welcome Bonus of 20,000 Membership Rewards points when you spend a total of $3,000 in purchases on your Card in your first 3 months of Cardmembership.
BMO World Elite Mastercard
30,000 points
Up to 3 points per $1 spent
20.99%
$0 annual fee for the first year ($150 thereafter)
Min. recommended credit score: 760
Get up to 30,000 points and the $150 annual fee waived in the first year.
American Express Aeroplan Card
40,000 points
Up to 2x points
30% annual interest rate applies to balances not paid in full each month
$120
Min. recommended credit score: 700
Earn up to a total of 40,000 welcome bonus Aeroplan points and a bonus Buddy Pass. New Cardmembers can earn up to $1,200 in value within the first year.
American Express Business Edge Card
57,000 points
Up to 3 points per $1 spent
19.99%
$99
Min. recommended credit score: 700
Earn up to 57,000 Membership Rewards points in your first year.
American Express AIR MILES Platinum Credit Card
2,000 Miles
Up to 1 Air Mile per $5 - $10 spent
20.99%
$120
Min. recommended credit score: 700
Earn a Welcome Bonus of 2,000 AIR MILES within the first three months. That’s enough to redeem for $200 towards your purchases with AIR MILES Cash.
American Express Aeroplan Reserve Card
90,000 points
Up to 3x points
19.99%
$599
Min. recommended credit score: 700
Earn up to a total of 90,000 welcome bonus Aeroplan points and a bonus Buddy Pass. New Cardmembers can earn up to $3,000 in value within your first year. Plus, receive up to $100 in statement credits every four years when a NEXUS application or renewal fee is charged to your card.
HSBC World Elite® Mastercard®
100,000 Points
Up to 6 points per $1 spent
19.9%
$0 annual fee for the first year ($149 thereafter)
Min. recommended credit score: 650
Earn up to 100,000 Points. Get a Welcome Bonus of 20,000 Points (up to $100 value). Plus, earn an additional 80,000 Points and get the 1st year annual fee waived for the primary cardholder (up to $549 value). Apply by January 31, 2022.
BMO CashBack World Elite Mastercard
Up to 10% cash back
1% cash back
20.99%
$0 annual fee for the first year ($120 thereafter)
Min. recommended credit score: 760
Get up to 10% cash back in your first 3 months and the $120 annual fee waived in the first year.
American Express Aeroplan Business Reserve Card
90,000 points
Up to 3x points
16.99%
$599
Min. recommended credit score: 700
Earn up to 90,000 Aeroplan points and a bonus Buddy Pass.
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Compare up to 4 providers

Name Product Welcome Offer Cash Back Rate Purchase Interest Rate Annual Fee Min. Credit Score Reward Description
Neo Financial Credit Card
N/A
Average 5% cash back
19.99% - 24.99%
$0
Min. recommended credit score: 600
BMO CashBack Mastercard
5% cash back
Up to 3% cash back
19.99%
$0
Min. recommended credit score: 660
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
Tangerine World Mastercard
15% cash back
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 600
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
Tangerine Money-Back Credit Card
15% cash back
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 600
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
SimplyCash Card from American Express
4% cash back
Up to 1.25% cash back
19.99%
$0
Min. recommended credit score: 700
Earn 1.25% cash back on all eligible purchases.
SimplyCash Preferred Card from American Express
10% cash back
2% cash back
19.99%
$99
Min. recommended credit score: 700
Earn 2% cash back on all eligible purchases
BMO CashBack World Elite Mastercard
Up to 10% cash back
1% cash back
20.99%
$0 annual fee for the first year ($120 thereafter)
Min. recommended credit score: 760
Earn 5% cash back on groceries, 4% on transit including ride sharing, taxis and public transportation, 3% on gas and electric vehicle charging, 2% on recurring bill payments and 1% unlimited cash back on all eligible purchases.
BMO Cashback Business Mastercard
10% cash back
Up to 1.75% cash back
19.99%
$0
Min. recommended credit score: 650
Earn 1.5% cash back on eligible gas purchases, office supplies and on cell phone and internet recurring payments, earn 1.75% cash back at participating Shell stations, and earn 0.75% on all other eligible card purchases.
BMO CashBack Mastercard For Students
5% cash back
Up to 3% cash back
19.99%
$0
Min. recommended credit score: 660
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
Scotia Momentum No-Fee Visa Card
Up to 5% cash back
1% cash back
19.99%
$0
Min. recommended credit score: 660
Get 1% cash back on all eligible gas station, grocery store and drug store purchases and recurring bill payments, and get 0.5% cash back on all other eligible purchases.
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Compare up to 4 providers

Name Product Welcome Offer Rewards Purchase Interest Rate Annual Fee Min. Credit Score Description
BMO CashBack Mastercard
5% cash back
Up to 3% cash back
19.99%
$0
Min. recommended credit score: 660
Get 5% cash back on all eligible purchases in the first three months of card membership (up to max. spend of $2,000). Plus, get a rate of 1.99% on balance transfers with a 1% balance transfer fee for nine months.
Tangerine World Mastercard
15% cash back
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 600
Earn an extra 15% cash back (up to $150) on up to $1,000 of everyday purchases in the first 2 months Until January 31, 2022. Plus, get a 1.95% interest rate on balance transfers for the first 6 months (valid within the first 30 days of account opening, 1% transfer fee applies).
Brim Mastercard
Up to $200 worth of bonuses
1 point per $1 spent
19.99%
$0
Min. recommended credit score: 700
Earn up to $200 worth of bonus points when you shop with Brim retailers for the first time through the Brim mobile app.
Tangerine Money-Back Credit Card
15% cash back
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 600
Earn an extra 15% cash back (up to $150) on up to $1,000 of everyday purchases in the first 2 months Until January 31, 2022. Plus, get a 1.95% interest rate on balance transfers for the first 6 months (valid within the first 30 days of account opening, 1% transfer fee applies).
SimplyCash Card from American Express
4% cash back
Up to 1.25% cash back
19.99%
$0
Min. recommended credit score: 700
Earn 4% cash back on purchases (up to $200 cash back) for the first 6 months of Cardmembership.
American Express Green Card
10,000 points
1 point per $1 spent
20.99%
$0
Min. recommended credit score: 700
Earn a Welcome Bonus of 10,000 Membership Rewards points when you charge $1,000 in purchases to your card in the first 3 months as a new Cardmember.
BMO Rewards Mastercard
10,000 points
Up to 2 points per $1 spent
19.99%
$0
Min. recommended credit score: 725
Get a bonus of 10,000 BMO Rewards points when you spend $1,000 in the first 3 months. Plus, get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
Home Trust Secured Visa (No Annual Fee)
N/A
N/A
19.99%
$0
Min. recommended credit score: Any score
The no annual fee Home Trust Secured card comes with a standard 19.99% purchase and cash advance rate. Apply with any credit score and start rebuilding your credit.
BMO Cashback Business Mastercard
10% cash back
Up to 1.75% cash back
19.99%
$0
Min. recommended credit score: 650
Get 10% cash back on gas, office supplies, cell phone bills and internet bills for 3 months.
BMO AIR MILES Mastercard
800 Miles
Up to 3x Air Miles for every $25 spent
19.99%
$0
Min. recommended credit score: 660
Get 800 AIR MILES Bonus Miles (enough for $80 towards purchases with AIR MILES Cash). Get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
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Name Product Min. Required Deposit Purchase Interest Rate Cash Advance Rate Annual Fee
Refresh Financial Secured Card
$200
17.99%
N/A
$12.95 + $3/month
The Refresh Secured Card has no credit check, a low annual fee and guaranteed approval once you secure your card with anywhere from $200 - $10,000.
Home Trust Secured Visa (No Annual Fee)
$500
19.99%
19.99%
$0
The no annual fee Home Trust Secured card comes with a standard 19.99% purchase and cash advance rate. Apply with any credit score and start rebuilding your credit.
Home Trust Secured Visa (Low Rate & Monthly Fee)
$500
14.9%
19.8%
$60
Pay a monthly fee of $5 and get a low purchase interest rate of 14.90%.
Home Trust Secured Visa (Low Rate)
$500
14.9%
19.8%
$59
Rebuild your credit score and enjoy a low purchase interest rate of 14.90% and a cash advance rate of 19.80%.
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Quick comparison

Advantages versus disadvantages of using credit cards comparison table

Should I use a credit card?

Credit cards are suited to certain types of people, but not others. As well as considering the pros and cons, you may like to look at the following factors to help you decide if a credit card is right for you.

A credit card may suit you if you:

  • Are at least 18 years of age
  • Are a Canadian citizen or a permanent resident
  • Have a regular source of income
  • Regularly pay your bills on time
  • Want to keep certain transactions separate from your everyday bank account
  • Are looking to earn rewards for your spending
  • Need more flexible cashflow
  • Can afford to pay a little extra for the convenience
  • Often shop online

A credit card may not suit you if you:

  • Don’t meet the age or residency requirements
  • Often struggle to pay bills on time
  • Don’t have a regular source of income
  • Have poor spending habits
  • Can’t afford annual fees or interest charges
  • Have bad credit
  • Are happy to just use a debit card

Bottom line

If you’re thinking about getting a credit card, it’s important to consider the benefits and disadvantages they offer based on your own personal financial circumstances. As well as helping you decide whether a credit card is right for you, this process can help you narrow down the range and type of credit cards to compare so that you can find an option that works for you.

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